(Bloomberg) — Palantir Technologies Inc. said that demand for its artificial intelligence products was driving sales, and gave a higher-than-expected profit outlook for 2024. The company’s shares climbed more than 15% in after-hours trading.
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The Denver-based software and analysis company said it expects adjusted income from operations of $834 million to $850 million for this year. Analysts, on average, had expected $760.3 million, according to estimates compiled by Bloomberg.
Palantir also reported 2023 net income of $210 million, its first year of being profitable, Palantir Chief Executive Officer Alex Karp said in a letter to shareholders. The results exceeded analyst estimates of $194.5 million.
“Our commercial business is exploding in a way we don’t know how to handle,” Karp said in an interview Monday when the company reported financial results. “We don’t know what to do with the onslaught of demand.”
The company said revenue in the fourth quarter increased 20% to $608 million. Analysts had expected $603 million.
The shares hit a high of $20.04 after closing at $16.72 in New York. The stock has almost doubled in the past 12 months.
Karp told Bloomberg he is now “85% focused” on US operations and is “rebuilding the whole company” to meet growing AI demand. “It’s bombastic especially since you factor in that we’ve never succeeded in building an effective sales force,” Karp said. He expects Palantir to hold about 2,000 training sessions, or bootcamps, for potential customers across the country this year — more than double the amount last year because they’ve been successful. “This is product driven,” he said.
Palantir’s revenue from the US commercial market increased 70% in the fourth quarter to hit $131 million, the company said.
Co-founded by Karp and billionaire investor Peter Thiel in 2003, Palantir sells AI-powered software used by both commercial clients and governments that are allied with the US. Customers use the products to help make complex, data-driven decisions. Clients include engineering firm Jacobs, luxury car manufacturer Ferrari NV and the United Nations’ World Food Programme.
Palantir said growth has come from both new customers and expanding demands of existing ones. During the fourth quarter it closed 103 deals in excess of $1 million, and 21 deals in excess of $10 million — roughly double and quadruple the respective amounts compared to the same period a year earlier.
The company still generates the majority of its business from governments. Karp has made Palantir’s philosophy of supporting the military goals of the US and its allies a core part of its operations, picking up contracts from the Defense Department that other big tech companies had previously dropped following employee backlash.
Karp declined to provide details on how Palantir was being used in current conflicts worldwide, but cited risks to the US and its allies posed by Iran, Russia and China and said the company’s tools were being “actively used.”
“We are now engaged on three fronts,” Karp said. “We are proud of the role we’re playing on all three. I can’t say more.”
Some of Palantir’s government sales have been controversial. The company won a significant deal late last year with Britain’s National Health Service, sparking criticism in Europe that underscored a larger unease. Some overseas governments have resisted relying on a US-based company as a linchpin of the technology behind national health, defense and other operations. Despite broad expectations that France, Germany and other countries would buy software for their own uses after seeing it operate in Ukraine and more recently Israel, that surge has largely not yet occurred.
In a call with investors on Monday, Karp expressed frustrations with customers in Europe — including in the private sector. “Europe has decided it’s not going to engage in this revolution” around AI, he said, citing relatively slow sales on the continent.
As a result, the company is shifting more of its resources to the US. Karp said he’s telling Palantir employees based in Germany and France to “pack up” and return to operations in the US, where the demand is increasing faster than employees can handle.
Karp also said Palantir is getting “bombarded” by inbound requests from people looking for jobs, and that he’s getting personally involved in hiring decisions as he did during the company’s early days.
(Updates with context starting in the 14th paragraph.)
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